Don't make the mistake of just saying, "This is going to be
huge." If there is a lot of potential in the market for growth,
you must support your claims with facts and a reason for why now
is the right time to act.

Providing detailed, specific insights into technology and
societal or business-model trends that make your idea ripe now
will help a VC understand why the market is, or will be, large
when you are serving it. For example, when my VC firm Scale Venture Partners invested in
cloud-sharing company Box, we focused on the cost trends of
cloud storage and broadband, and concluded a theoretically
large market was about to emerge.

Q: Can you talk about customer acquisition
costs?A: When you are talking to VCs, you are talking
about money. VCs will ask entrepreneurs all sorts of questions
relating to financial information, as they want to invest in
companies that can become market leaders and highly profitable on
moderate amounts of capital.

For growth-stage companies, a lot of diligence centers on your
ability to scale profitably. Questions about sales cycles,
retention rates and account expansion possibilities let us
mentally build a growth profit and loss in our head. We look at
your financial model to understand your business sense. We then
use that information to build our own model to predict the
company's profits and our returns.

Q: Why won't a big company copy that
feature?A: Questions about your startup's features,
advantages and uniqueness are asked to suss out what strategies
you have in place to make your company sustainably different,
lower cost or both. They are also used to probe your plan's
longevity.

And don't get caught off guard, if VCs ask detailed, but
seemingly unrelated questions regarding strategy. Some of the
ones I have tossed out there include, "Where will you source your
raw materials?" and "How did Company X gain advantage over
Company Y back in 2005?" I am looking to assess the entrepreneurs
understanding of her or his industry and strategy potential.

Also, if a VC asks why you decided to get involved in the market,
it isn't just about your passions. This question also presses on
your unique insights on customer needs and market dynamics to
illustrate an emerging opportunity.

Q: What storms has your team weathered
together?A: "Tell me about your team" gets asked in
almost every meeting. In addition to your resumes, we want to
understand your relationships: Are your people naturally
complementary? Did the leader attract great talent, or have to
hunt for it? How does the team deal with stress? Can your initial
tight team also attract and absorb new talent? While you may be
able to spew out anecdotes about how wonderful your team is, keep
in mind, VCs also watch your body language. Your actions speak
volumes greater than words.

Understanding how you approach opportunities, people and problems
color every question. Venture capital is a long-term investment
business. If we invest, we'll be working together for years. Keep
in mind, we're watching how graciously you manage the meeting,
get us on topic and react to stress: It isn't a secret that every
interaction is evaluative. The process helps you too, as you
should be assessing whether the VC is the right partner for your
endeavor.

What kinds of questions have VCs asked you during a
meeting? Let us know in the comments below.